First Home Owners Grant
You should be aware that you may be eligible for the First Home Owners Grant.
The First Home Owners Grant scheme has certain criteria that must be met for you to be eligible. For instance you must be an Australian citizen or permanent resident and you and/or your spouse / partner must have not previously owned a home in Australia. If you have purchased an investment home since 2000 you may still be eligible. If there are two applicants, at least one applicant needs to be an Australian citizen or permanent resident in order to qualify.
The amount of the grant varies from state to state. In Queensland, New South Wales and the ACT the amount is currently $7,000. In Victoria first home buyers may find an even higher amount is claimable. However stamp duty exemptions are not as favourable as is the case in other states.
The government gives you the First Home Owners Grant at the time of your property settlement. It is in the form of cash to add to your deposit. In 2004 the Government introduced legislation that requires you to live in the property for a period of at least 6 consecutive months commencing within the first 12 months after purchase and that the relevant property be owner occupied. Therefore, there is some flexibility in complying with this legislation and you still may qualify if you;
- decide not to live in the property straight away or
- live in it for six or more months and then rent it out.
A ‘First Home Owners Grant’ application form needs to be completed to apply.
Stamp Duty Concession
In NSW first home buyers may be eligible for the ‘Stamp Duty Exemption Scheme’ which gives first home buyers discounts on stamp duty payable dependant on the cost price of the purchased property. Again, eligible applicants must be Australian citizens or have permanent residency and you (and your spouse / partner) must have not previously owned a home in Australia. There are schemes in other states, however the exemptions receivable vary greatly.
The scheme in NSW gives a 100% stamp duty exemption for property purchases up to a cost price of $500,000.
When the cost price of the property exceeds $500,000 purchasers are on a sliding scale of increasing stamp duty up to a purchase price of $600,000 where 100% stamp duty is payable. However a $500,000 first home purchase in New South Wales, Queensland and ACT, as an example, will have no stamp duty payable (on the mortgage nor the transfer of title) saving many thousands of dollars in stamp duty costs.
The Deposit
If you are a first home buyer, you will need to provide some deposit towards the purchase of your home. The amount of deposit you require is dependent on a number of factors including;
- Purchase costs – the cost of stamp duties and other related expenses for example mortgage registration fees, application fees, legal costs or even mortgage insurance premiums.
- Property cost – the cost price of the property and the relevant loan amount you arrange against your property.
Each lender has their own lending criteria, however in general the maximum loan against your new purchase is 95% of the value of your property.
